The Morning Ledger: Yellen Faces Grilling

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The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: david.hall@wsj.com. Get The Morning Ledger emailed to you each weekday morning by clicking here. Follow us on Twitter @CFOJournal.

THE WEEK AHEAD:

Janet Yellen will face a grilling from the Senate Banking Committee this week. President Obama’s nominee to succeed Ben Bernanke as Fed chairman will be forced to defend the central bank’s easy-money policies when she appears before the committee on Thursday. Her reputation as a policy dove will be under intense scrutiny, Reuters notes. She has argued that the high cost of long-term unemployment might warrant allowing inflation to temporarily rise above the Fed’s 2% goal. Even so, she’s expected to be confirmed. “The bar is going to be 60 votes. That is clear. And she will probably surpass that bar,” said Louisiana Republican David Vitter, who has slammed the Fed’s easy money policies.

Another likely topic during her confirmation hearing is a matter over which she has no control, writes the WSJ’s Victoria McGrane: the vacancy for a Fed vice chairman for supervision. It’s up to President Obama to nominate a candidate for the job, a new role within the seven-member Fed board created by Dodd-Frank. He has yet to do so, frustrating Republican critics and some Democratic supporters of the law. Ms. Yellen’s response to questions about the vacancy could follow what Mr. Bernanke said in March 2012, when he was asked about it at a banking committee hearing. “Congress created the position and, yes, I’d like to see it filled,” Mr. Bernanke said.

Looking overseas, Japan is expected to report this week that its economic-revival experiment hit a speed bump over the summer, but that doesn’t necessarily mean Abenomics is faltering, the WSJ’s Takashi Nakamichi writes. Much of the problem lies in emerging markets, now the destination for two-thirds of all Japanese exports. “Conditions are harsher than what we had anticipated…due to the negative impact from the slowdown in emerging markets,” Sony CFO Masaru Kato said last month, explaining why the electronics giant reported weak quarterly results and slashed its earnings forecast. The implications of a possible Japanese slowdown go beyond Tokyo, as policy makers around the world have been hoping that a resurgent Japan could, for the first time in a generation, provide a lift for the global economy.

Markets flash: Japan ended higher as the stronger-than-expected U.S. jobs report on Friday lifted the dollar against the yen. European shares are little changed in holiday-thinned trade. And DJIA futures are higher. U.S. bond markets are closed for Veteran’s Day.

CORPORATE NEWS:

Office Depot faces taxing decision on new headquarters. A political stalemate could persuade Office Depot to move more than 2,000 jobs out of Illinois as lawmakers grouse about the growing number of companies seeking special tax treatment, the WSJ reports. The company wants to decide soon where to place its headquarters, after closing its $1.2 billion acquisition of OfficeMax last week. The choices: Naperville, Ill., where more than 2,000 people work for what was OfficeMax, or Office Depot’s home of Boca Raton, Fla., which houses more than 1,700 employees. To stay in Illinois, the new company is seeking relief from the state’s taxes, which are among the highest in the country. But a bill offering the office-supply chain $53 million in tax credits over 15 years failed to make it to a full Senate vote during a session that ended last week, and lawmakers aren’t likely to reconvene until next month at the earliest.

Washington state closes in on Boeing deal. The Washington state legislature completed passage of key elements of an incentive package aimed at guaranteeing that Boeing will locate manufacturing work for its 777X jetliner in Puget Sound, the WSJ reports. The roughly $8.7 billion package of extended tax breaks, education and workforce support and permit streamlining was passed less than a week after Democratic Governor Jay Inslee called for a special legislative session to swiftly approve the package. The incentives, along with a pending contract for Boeing’s largest union, are seen as crucial to Washington state’s beubg selected for the work.

Third-party sales divide J&J and Amazon.Johnson & Johnson and Amazon.com are clashing over complaints that Amazon isn’t doing enough to prevent people from selling damaged or expired J&J products on its website. The Journal’s Serena Ng and Jonathan D. Rockoff say the dispute is a prime example of a fear among consumer-products companies: On the Internet, it is easier to lose control over a brand image. The issue is with Amazon’s “third party” resellers—companies that set up online “stores” on Amazon.com, and sell any number of products, but that aren’t affiliated with Amazon. Some third-party sellers get their products from authorized distributors. But others might sell merchandise bought outside of official channels or at deep discounts from other companies.

Amazon to offer Sunday deliveries—with help from Post Office. Amazon.com is teaming up with the USPS to deliver packages on Sundays later this month, the WSJ reports. Amazon said Sunday delivery will begin on Nov. 17 in Los Angeles and New York and expand next year to Dallas, New Orleans, Houston and Phoenix, among others. Amazon will bring packages from its warehouses to Postal Service locations on Saturday evening or Sunday morning. The agency will then deliver them to doorsteps. Amazon is taking advantage of a little-known offering available to any shipper. The Postal Service makes limited Sunday package deliveries for its own needs around the holidays, but the arrangement with Amazon represents its first large foray into Sunday delivery. The Amazon contract will be a financial boost to the Postal Service, which continues to bleed red ink.

Big banks may block traders from chat rooms.J.P. Morgan and Credit Suisse are considering blocking employees from computer chat rooms that have become pervasive tools of the modern trading floor, but which face mounting scrutiny from regulators. A series of regulatory probes into interest-rate rigging and possible manipulation of other markets has turned a spotlight on the chat rooms, the WSJ’s Jenny Strasburg reports. The potential for hefty fines and damage to their reputations has some banks considering what would amount to a radical overhaul of the way traders conduct their business. RBS, Barclays, UBS and Citigroup also are reviewing chat-room use and standards for controlling and monitoring all electronic communications.

KPMG treads new ground with fund.KPMG is launching its first investment fund as it branches out into other areas in a sign of the big changes afoot in the financial services industry, the FT reports. The move is significant as the fund will invest in data and analytics businesses, which are increasingly popular with investors as technology is considered a growth area that should benefit from economic recovery. The launch follows last month’s announcement by Deloitte that it is buying Seattle-based social media marketing agency Banyan Branch for an undisclosed sum. Deloitte’s acquisition is another example of how these big groups are looking to take advantage of the changes in technology, social media and data provision.

ECONOMY:

China’s recovery gives boost to Xi. China’s economy entered the final quarter of 2013 with a jump in manufacturing and exports, momentum that offered confidence to Communist leaders gathering to determine policy shifts for the coming decade, Bloomberg reports. Industrial output in October was up 10.3% from a year earlier, which was faster than expected, and manufacturing investment strengthened. And customs data showed overseas sales rebounded by more than forecast. “The recent data all suggest a gently recovering economy—good enough to allow the leadership to stop worrying about the next few months and focus on medium-term reform,” said Stephen Green, head of Greater China research at Standard Chartered in Hong Kong. “The question is now whether they have a convincing-enough plan to deal with those medium-term challenges.”

CFO MOVES:

Exa, a producer of simulation software for vehicle manufacturers based in Burlington, Mass., said Chief Financial Officer Edmond L. Furlong plans to resign March 31, 2014. Chief Accounting Officer Stephen P. Samo will serve as acting CFO once Mr. Furlong leaves, according to a regulatory filing. Mr. Furlong received compensation in fiscal 2013 valued at $247,025, almost all in the form of salary, according to a proxy filing.

Marrone Bio Innovations, a maker of pest-management and plant-health products based in Davis, Calif., said Chief Financial Officer Don Glidewell is retiring. He will remain with the company for up to five months while a search for his successor is underway, according to a press release. Mr. Glidewell received compensation last year valued at $556,150, according to a regulatory filing associated with its recent initial public offering. Of that, $335,067 came in the form of stock options.

Hexagon Composites, a producer of pressurized-gas containers based in Norway, said Chief Financial Officer Tor Husø will relinquish that title to focus on his other job as CFO of Flakk Group, Hexagon’s largest shareholder. A search for Mr. Husø’s successor at Hexagon is underway, and he will remain in his current role until a new CFO is in place, according to a press release.

Nearly across the board, mid-market executives are hiring new employees, buying new technology solutions, acquiring businesses to reach new markets and preparing IPOs, according to a Deloitte survey of more than 500 mid-market executives. But companies are running up against a number of constraints as they seek to expand, particularly in acquiring and retaining skilled talent.